Will China manufacturing costs be a tech overhang?

Goldman Sachs issued a research note Monday that may highlight an important technology theme: China's manufacturing costs are going to become an issue. 

In the note, penned by Goldman analysts David Bailey and Min Park, Goldman recaps an Asia tour examining the tech supply chain. The analysts came away with renewed confidence about the prospects of HP, Apple and Seagate. But that's not the kicker.

When the analysts recapped their top 10 conclusions from the Asia tour, they noted that "China manufacturing costs will become one of the important overhang issues starting in 2008."

Simply put, manufacturing goods in China may not be the Holy Grail anymore for technology companies. That roughly equates to a potential profit margin squeeze. In addition, these manufacturing costs are going to be passed on to you. Bottom line: There may be some gadget inflation on the way.

This conclusion isn't totally a shocker given the weakness of the U.S. dollar. But if these analysts are right China's manufacturing costs may be a dominant theme for 2008.

Other conclusions of note:

• The printer market is slowing and HP and Canon are thumping tier two players. Lexmark is in trouble.
• The impact of solid state drives on hard drives is being reevaluated to the downside.
• Batteries and LCD supplies remain tight, but the big vendors are sidestepping any problems.
• And in the stuff we already knew department. HP is shining, Dell is improving but progress "is very uneven," Apple's holiday sales are strong and notebook demand is solid. I don't think any of those conclusions are going to shock anyone.